Peoples Bancorp of North Carolina's (NASDAQ:PEBK) Dividend Will Be Increased To US$0.17

Peoples Bancorp of North Carolina, Inc. (NASDAQ:PEBK) will increase its dividend on the 15th of September to US$0.17. This makes the dividend yield about the same as the industry average at 2.3%.

Check out our latest analysis for Peoples Bancorp of North Carolina

Peoples Bancorp of North Carolina's Earnings Easily Cover the Distributions

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. Before making this announcement, Peoples Bancorp of North Carolina was easily earning enough to cover the dividend. This means that most of what the business earns is being used to help it grow.

If the trend of the last few years continues, EPS will grow by 9.5% over the next 12 months. Assuming the dividend continues along recent trends, we think the payout ratio could be 26% by next year, which is in a pretty sustainable range.

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2011, the first annual payment was US$0.073, compared to the most recent full-year payment of US$0.68. This means that it has been growing its distributions at 25% per annum over that time. Dividends have grown rapidly over this time, but with cuts in the past we are not certain that this stock will be a reliable source of income in the future.

We Could See Peoples Bancorp of North Carolina's Dividend Growing

With a relatively unstable dividend, it's even more important to see if earnings per share is growing. Peoples Bancorp of North Carolina has impressed us by growing EPS at 9.5% per year over the past five years. Growth in EPS bodes well for the dividend, as does the low payout ratio that the company is currently reporting.

We Really Like Peoples Bancorp of North Carolina's Dividend

Overall, a dividend increase is always good, and we think that Peoples Bancorp of North Carolina is a strong income stock thanks to its track record and growing earnings. Distributions are quite easily covered by earnings, which are also being converted to cash flows. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. As an example, we've identified 1 warning sign for Peoples Bancorp of North Carolina that you should be aware of before investing. Looking for more high-yielding dividend ideas? Try our curated list of strong dividend payers.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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